Accounts Receivable Aging
Filed Under »
 |
Definition of 'Accounts Receivable Aging'
A periodic report that categorizes a company's accounts receivable according to the length of time an invoice has been outstanding. Accounts receivable aging is a critical management tool as well as an analytic tool that helps determine the financial health of a company's customers, and therefore the health of their business.
|
 |
Investopedia explains 'Accounts Receivable Aging'
If an accounts receivable aging demonstrates that a company's receivables are being collected much slower than normal, this is a warning sign that business may be slowing down or that the company is taking greater credit risk in its sales practices.
As a management tool, accounts receivable aging may indicate that certain customers are not good credit risks. It can therefore help a company make prudent decisions about whether or not to keep doing business with customers that are chronically late payers.
|
-
Find out how a simple calculation can help you uncover the most efficient companies.
Read More »
-
Find out how to use this figure to analyze a firm's financial condition.
Read More »
-
Learn about the current ratio, quick ratio, cash ratio and cash conversion cycle.
Read More »
-
|
|
